I’m going to come right out and say it, if you’re not a high income earner you probably should just skip this book UNTIL you have a high income or you’ve build a very large nest egg and need some tax strategies to eliminate or reduce taxes in retirement.
What I Liked
The book is a fairly easy read and McKnight creates a simple and straight forward approach to things that a person should think about BEFORE retirement. Essentially, every retiree needs three buckets of money stashed away: Taxable, Tax Deferred and Tax Free.
The “Tax Deferred” bucket are your 401k’s and IRA’s that grow tax deferred over time.
The “Taxable” bucket are your bank and brokerage accounts that incur tax for income gains.
The “Tax Free” bucket is essentially loans you make to yourself from a Life Insurance Retirement Program (LIRP).
It’s a great book, easy to follow and understand and has some examples. The key reason you need three buckets is because of the every changing tax structure in the United States. Today’s deduction will likely be gone tomorrow and the combination of inflation and un-adjusting exemptions may virtually guarantee you’ll be in a higher tax bracket retired than you were while working.
What I Didn’t Like
The book paints a bleak “doom and gloom” outlook to future taxation with some very valid points such as huge debt load the U.S. government is carrying and the aging demographic dependency on social programs such as social security, medicare and medicaid. The key argument of the book and why you need a “tax free” bucket of money is because of potentially higher tax brackets such as those that existed before that sky rocketed to 90 percent.
What I REALLY Didn’t Like
The book pretty much sold me on the need to look into getting a LIRP for my family however this is where the book falls short. It doesn’t really recommend any firms or lists of LIRPs to start with but rather leaves it up to you to find a financial advisor that can pick the right insurance firm with the right LIRP.
POST BOOK RESEARCH
I would have preferred at least some big names in the business but the one thing that gives me pause is the lack of ratings on any of these products or the firms selling them. The industry really needs to adopt a ranking and ratings on the specific LIRP products they are selling similar to ratings on Amazon.
CONCLUSION
If you are a high income earner that has been shut out of Roth IRAs due to income limits or other constraints then this book has a potential solution. If you fall into this category, you NEED to read the book. If you’re struggling to pay the bills or have other fiscal constraints, I’d say skip it or wait till you get your financial house in order.
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